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Jewish World Review Feb. 4, 2004 / 12 Shevat 5764

Amity Shlaes

Amity Shlaes
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Here's what America doesn't need: Another New Deal | No American political symbol is stronger than that of the New Deal. Franklin Roosevelt was thinking of a specific event, the Great Depression, when he first constructed his image of the card table: Americans he said, should not be trapped playing the losing game of the Depression but deserved a fresh hand, a New Deal. Yet nearly every Democratic presidential candidate since Roosevelt has invoked the New Deal--and even a few Republicans have tried out New Deal phraseology. The way that a candidate employs the image reveals much about his candidacy.

Take John Kerry. Kerry, the Massachusetts senator who is the front-runner in the race for the Democratic presidential nomination, puts the New Deal at the forefront of his campaign, labeling his agenda "The real deal."

The obvious reason for this choice is that the New Deal was the policy of his party's most successful politician.

FDR won 7 million more popular votes than the incumbent Herbert Hoover; he carried 42 of 48 states. Democrats took both Houses. The people were granting Roosevelt license to rewrite the national program, an extraordinary act in a nation built on the principle of separation of powers. Roosevelt exploited that license with his 100 Days program following his inauguration.

Kerry is already talking of the program of his own first "100 Days" agenda, through which he wants to suggest the potential to win a landslide. After all it would be silly to cite Jimmy Carter when you can invoke Roosevelt.

It was not merely Roosevelt who became powerful after such a victory; it was also his party. The "Brain Trust" who advised FDR had studied the revolutions of Europe. They admired the authority and the audacity of the new leaders.

"Why should the Russians have all the fun of remaking a world?" asked Stuart Chase, author of a 1933 book titled "The New Deal." With the New Deal, the Democrats could have fun of their own. Such fun probably inspires Kerry's advisers, who yearn for victory after the bitter outcome of the 2000 presidential election.

But Kerry has another reason for presenting himself as a New Deal candidate. He may not be apocalyptic like Howard Dean, but he still wants to generate a sense of emergency similar to the one that prevailed in the early 1930s. He wants to suggest that the economy is fundamentally flawed.

After all, President Bush has his emergency, the War on Terror. And as crass as it seems, this emergency is good political luck for Bush: vVoters find it hard to turn against a commander in chief. If Kerry can convince the nation that it is enduring a parallel economic emergency, he strengthens his candidacy.

This seems only fair until you consider the facts of the Depression, some of which are beginning to slip out of national memory. The economy did not merely shrink a little bit. (Someone recently asked me: "How low did growth get in the Depression?") It shrank by one fourth. Unemployment came close to 25 percent. As for the money, it literally ran out.

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Next to the 1930s, today's economy seems benign. There are problems. The switch from a manufacturing economy to a service economy is rough. The U.S. is losing manufacturing jobs--albeit not jobs overall. The new drug entitlement for senior citizens is untenable, a truth recently underscored by the Congressional Budget Office. Payroll taxes are too high. Fannie Mae and Freddie Mac, the too-big-to-fail mortgage brokers, could fail and drag the rest of us down with them, although we have not heard much about that from the campaigns.

But this economy suffers neither serious inflation nor deflation and enjoys both outstanding productivity gains and strong growth. Americans today speak of "growth recessions," a luxury enjoyed by few developed countries. Headlines read "Disappointing 4 percent growth." Disappointing, one has to ask, to whom? Two groups: opponents of Bush and bond traders. As much as an economic emergency might serve Kerry, there isn't one. Kerry himself even acknowledges this, in his way, by proposing a deficit plan nearly identical to the president's: Kerry wants to halve the deficit in four years, Bush in five.

Here we could argue that Kerry is not the only politician guilty of exaggeration. To the chagrin of his advisers, Ronald Reagan, the man who ran as the FDR of the right, called the recession of 1980 a "depression." Bill Clinton won by focusing on the message "It's the economy, stupid," in a quarter when real growth was higher than 5 percent.

But bashing the economy is not the only way for a Democrat to win. John Kennedy put a positive spin on the New Deal, calling his plan the New Frontier. The idea was to conquer space with the same energy that 1930s Americans had conquered their challenges. The point of Kennedy's phrase, "ask not what your country can do for you," was to go beyond expanding entitlements: contrast this with Kerry's statement about economies working for people. Kennedy recognized that he could not be too gloomy: 1960 saw growth of 2.5 percent.

Given that the economy is now operating in a similar range, it is striking to find Democrats pulling such dour faces. They may succeed in their bluff. But only if Republicans let them.

For as economic hands go, the one currently being dealt to the average American is a fine one indeed.

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JWR contributor Amity Shlaes is a columnist for Financial Times . Her latest book is The Greedy Hand: How Taxes Drive Americans Crazy and What to Do About It. Send your comments by clicking here.


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© 2003, Financial Times